Which of the following expansionary fiscal policy changes would be most favored by those economists who think that the government is too large and inefficient?
A. A $40 billion increase in government spending
B. A $20 billion tax cut and $20 billion increase in government spending
C. A $10 billion tax cut and $30 billion increase in government spending
D. A $40 billion tax cut
D. A $40 billion tax cut
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A country reported a nominal GDP of $85 billion in 2010 and $100 billion in 2009. It also reported a GDP deflator of 100 in 2010 and 105 in 2009. Between 2009 and 2010,
a. real output and the price level both rose. b. real output rose and the price level fell. c. real output fell and the price level rose. d. real output and the price level both fell.
In the long run, a competitive firm has a marginal product of labor, MPL = L-1. The output price is $20 per unit and the wage is $7.25 per hour. The long-run labor demand curve for the firm is
A) 20L-0.05. B) 7.25L-0.05. C) 20L-1. D) 7.25L-1.
The unemployment rate is usually zero except during recessions
a. True b. False
Polar Water, a company that delivers bottled water, is considering three investment opportunities. The expected returns for each of the projects are as follows: buying a new delivery van, 12%; computer training for its office staff, 9%; and defensive driving training for its drivers, 8%. If the current interest rate is 7%, the firm should invest in
A. only the purchase of a new delivery van. B. the purchase of a new delivery van and computer training for its office staff. C. all of the projects. D. none of the projects.